Rapala Vmc Oyj · OMXHEX:RAP1V
Rapala Vmc Oyj — Investor Day (May 2018)
101 slides from Rapala Vmc Oyj's investor day presentation, May 4, 2018
Slide 1: Rapala VMC Oyj Capital Markets Day
RAPALA VMC OYJ CAPITAL MARKETS DAY 4 May 2018 Helsinki
Slide 2: Agenda
Agenda 9.00 Opening and introduction of management 9.15 Group strategy and execution Jussi Ristimäki, CEO 10.10 Financials Jan-Elof Cavander, CFO 10.30 Break 10.50 Rapala – building an iconic brand Tom Mackin, EVP 11.10 Market driven growth utilizing innovation power Lars Ollberg, COO Bonnie Hockin,
Slide 3: Presenters
Presenters Jussi Ristimäki Olli Aho Jan-Elof Cavander Lars Ollberg Tom Mackin President and Chief Executive Vice President, Chief Financial Officer Chief Operating Officer Executive Vice President, Executive Officer (CEO) Company Counsel and Investor Head of Distribution and Relations Brands in Nort
Slide 4: Group Strategy and Execution
GROUP STRATEGY AND EXECUTION JUSSI RISTIMÄKI PRESIDENT AND CHIEF EXECUTIVE OFFICER
Slide 5: Rapala VMC is the world's largest fishing lure manufacturer
Rapala VMC is the world’s largest fishing lure manufacturer Key facts of Rapala Global coverage – Own distribution on 6 continents • Rapala, world’s largest fishing lures manufacturer, was founded in 1936 • Today Rapala VMC Corporation is one of four global players in recreational fishing with the w
Slide 6: Group's own products form the core of our offering
Group’s own products form the core of our offering • The Rapala Group focuses on the manufacturing and distribution of fishing tackle. • The Group's fishing products are manufactured or subcontracted by the Group and sold under its own brands. • Because fishermen associate certain brands with certai
Slide 7: Distribution of 3rd party products to leverage our global network
Distribution of 3rd party products to leverage our global network • Most of the third party products distributed by the Rapala Group are for recreational fishing to complement our own brands’ range • We have distributed Shimano rods and reels since 1993 and now cover 26 countries in Europe as well a
Slide 8: Comprehensive product portfolio
Comprehensive product portfolio Premium products for mass markets • Rapala is by far the world’s most recognized fishing lure brand • Fishing success makes fishermen loyal to brands and Rapala can cater to all kinds of fishermen with its broad and strong brand and product portfolio • Strong brands a
Slide 9: We control the value chain from production to global distribution
We control the value chain from production to global distribution – leading global market position as fishing equipment supplier Worldwide distribution network Production facilities support distribution • Industry’s broadest distribution network – we • Rapala VMC has several own production run distr
Slide 10: Global recreational fishing industry – fragmented market
Global recreational fishing industry – fragmented market with number of players • In the countries where Rapala Group operates there is estimated to be closer to 200 million recreational fishermen • In developed countries growth is limited, while developing countries represent growth potential as st
Slide 11: Competitive landscape in the fishing tackle industry
Competitive landscape in the fishing tackle industry Company Origin Major fishing product categories Rapala Finland Lures, hooks, lines, accessories Big global Shimano Japan Rods, reels, accessories and lines players Globeride (Daiwa) Japan Rods, reels, lures, apparel and accessories Newell Brands (
Slide 12: Reforming Rapala VMC to address changes in the business environment
Reforming Rapala VMC to address changes in the business environment Evolving business environment Evolving Rapala • Digitalization • Focus on end-to-end profitability and • Changing return on capital consumer • Market, customer and consumer focus behavior Strategy • Increasing importance of the bran
Slide 13: Executive Committee
Executive Committee – organization amended in September to speed up strategy execution Jussi Ristimäki Olli Aho Stanislas de Castelnau Jan-Elof Cavander Tom Mackin President and Chief Executive Vice President, Executive Vice President, Chief Financial Officer Executive Vice President, Executive Offi
Slide 14: Group strategy: organic growth within fishing and improving profitability
Group strategy is based on organic growth within fishing and improving profitability with a lighter balance sheet Own manufacturing Competitive 1 Brand 2 platform and 3 Research and 4 Broad own distribution advantages portfolio established sourcing development network and strong capabilities local p
Slide 15: Focus areas on our growth agenda
Focus areas on our growth agenda • Deep market and customer focus • Executive committee level role for • Valued supplier to retail customers by business intelligence Market and providing relevant, innovative and • Direct consumer contacts in digital world customer focus competitive product range and
Slide 16: Key projects in increasing return on capital
Key projects in increasing return on capital – profitability and balance sheet addressed • Exiting China and ramping up Batam • Special projects ongoing to improve operations has generated unexpected operations management Turnaround of complexities and has burdened the • External consultants hired B
Slide 17: Financials
FINANCIALS JAN-ELOF CAVANDER CHIEF FINANCIAL OFFICER
Slide 18: Long-term development in sales
Long-term development in sales – major impact from the declined Russian market 300 291 287 273 278 38 38 18 261 31 253 250 15 15 200 150 253 249 261 242 246 239 100 50 0 2012 2013 2014 2015 2016 2017 Russia Group excl. Russia 18
Slide 19: Long-term development in comparable EBIT
Long-term development in comparable EBIT – profitability contribution from Russia has decreased following the crisis in the market 28 26.5 27.1 26 25.3 24 3.5 22 9.2 9.3 20.9 20 18.8 18 5.4 2.2 16 14 2017 profitability 12 11.4 • Two key customers in the 21.8 1.2 US entered Chapter 11, 10 17.2 17.9 w
Slide 20: Positive results in lightening balance sheet via reducing working capital
Positive results in lightening balance sheet via reducing working capital -31.6 MEUR 140 136.1 135 130.8 130.1 130 125.5 125 120 117.9 115 110 104.5 105 0 2012 2013 2014 2015 2016 2017 Working capital in MEUR • Streamlining internal supply chains • Development of sales and operations planning • Lean
Slide 21: 2018 outlook
2018 outlook The Group expects full year net sales with comparable FX rates to be above last year’s level and comparable operating profit (excluding mark-to-market valuations of operative currency derivatives and other items affecting comparability) to exceed 15 MEUR. 21
Slide 22: Reportable segments: Group Products and 3rd Party Products
Reportable segments: Group Products and 3rd Party Products NET SALES • Group Products are either (MEUR) manufactured or subcontracted goods sold under own brands 172,1 168,8 2016 • 3rd Party Products business is 2017 distribution of fishing and hunting 88,5 84,5 products • Distribution of 3rd Party
Slide 23: Stable operative cash flow with predictable CAPEX levels
Stable operative cash flow over the years with predictable CAPEX levels Cash flow from operations (MEUR) Operative capital expenditure (MEUR) 28 26,7 12 26 25,2 11 10,7 24 10 21,6 9,1 22 9 8,5 8,4 20 19,1 8 7,7 18 15,3 15,6 7 16 6,0 14 6 12 5 10 4 8 3 6 2 4 2 1 0 0 2012 2013 2014 2015 2016 2017 2012
Slide 24: Funding – maturity profile of Group debt
Funding – maturity profile of Group debt (as of December 2017) 60 60 55 50 25 45 40 37 35 35 5 5 30 10 25 25 5 20 15 32 30 25 10 20 5 0 2018 2019 2020 2021 Bank Loans Undrawn Committed credit facilities Commercial paper program Hybrid Bond 24
Slide 25: Rapala VMC share
Rapala VMC share Viellard Migeon & Cie 19,2% Sofina S.A. Nordea Funds The State Pension Fund Odin Funds 38,4% Shimano Singapore Private Limited Taaleritehdas Funds Ilmarinen Mutual Pension Insurance 12,4% Elo Mutual Pension Insurance Norvestia Oyj Own shares Other shareholders 1,7% 3,3% 0,3% 1,7% 2,
Slide 26: Rapala – An Iconic Fishing Brand
RAPALA – AN ICONIC FISHING BRAND TOM MACKIN EXECUTIVE VICE PRESIDENT, HEAD OF DISTRIBUTION AND BRANDS IN NORTH AMERICA
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Slide 28: Size of the Prize
SIZE 55 Million Fishermen in the USA Stable Participation and Spending OF THE PRIZE nd st 2 Most Popular Activity (1 = exercising) Popular Among All Demographics Growing Popularity Among Youth Opportunity to Grow Share in Saltwater
Slide 29: Market Share Position
#1 MARKET Rapala Lures = #1 Market Share SHARE Rapala Fillet Knives = #1 Market Share POSITION VMC Treble Hooks = #1 Market Share
Slide 30: Brands of hard baits purchased
BRANDS OF HARD BAITS PURCHASED ANNUAL ANNUAL ANNUAL ANNUAL ANNUAL ANNUAL 2016 2015 2016 2015 2016 2015 Arbogast 0.4% 0.6% Gibbs 0.3% 0.4% Rapala 24.6% 23.3% Bagley 0.6% 0.1% Gotcha 0.2% 0.2% Rebel 2.2% 1.3% Bandit 1.1% 2.1% H20 (Academy) 0.9% 1.0% Reef Runner 1.4% 0.6% Bass Pro 4.0% 2.8% Heddon 1.5%
Slide 31: Brands of fishing knives purchased
BRANDS OF FISHING KNIVES PURCHASED ANNUAL ANNUAL ANNUAL ANNUAL 2016 2015 2016 2015 American Angler 1.7% 1.3% Marttiini 0.0% 0.0% Benchmade 0.6% 0.0% Mora 0.2% 1.3% Black Tip 0.2% 1.0% Mr Twister 7.6% 1.0% Bubba Blade 6.8% 16.3% Mustad 6.0% 5.3% Buck 1.9% 1.4% Outdoor Edge 0.0% 0.5% Case 0.0% 1.7% Ra
Slide 32: World Records
WORLD RECORDS 900+ World Record Catches Every Continent in the World (Except Antarctica)
Slide 33: Act Like a Super Brand
ACT LIKE A SUPER BRAND
Slide 34: 14M global downloads from 150 countries
14M GLOBAL DOWNLOADS FROM 150 COUNTRIES
Slide 35: Slide 35
Slide 36: Slide 36
Slide 37: US Retail Focus
US RETAIL FOCUS Dominate Rapala Lure Market Share and Retail Space Allocation Sell Thru 20,000 Retail Locations and Major Online Presence Walmart Bass Pro Shops/Cabela’s Amazon
Slide 38: Brand Momentum
BRAND MOMENTUM
Slide 39: Brand Momentum
Clarifies your strategies Excites your employees, attracts the best Ignites your sales force BRAND Justifies price, maximizes margins MOMENTUM Reinforces your core brand enthusiasts Attracts new customers Builds brand loyalty Provides a platform for new product launches Grows market share Intimidate
Slide 40: Marketing Program
MARKETING PROGRAM
Slide 41: Direct Marketing
DIRECT MARKETING DIGITAL CATALOG SELL SHEETS BANNERS/DECALS VIDEO ASSETS EMARKETING ERAP UP + Monthly articles NEWS SPLASH + Newsworthy events VIDEO ASSETS FACEBOOK PAGE YOUTUBE PROMOTIONS NATIONAL PROMOTION + Buy 5 lures = Get a Tshirt PRO STAFF + National Bass Pro Staff Mike laconelli Ott Defoe Br
Slide 42: Confident & Likeable
CONFIDENT & LIKEABLE
Slide 43: Slide 43
Slide 44: Gives fish more lip than they can take
\ N Gives fish more lip than they can take. Keene eg lhe acai cpeary Rarer ores ney nleone Peon. ” Pi f —; - . Take afish bobting, 8 it out, fish bring it back,
Slide 45: Slide 45
Slide 46: snianow laresioward
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Slide 47: Time to spool up high-percentage spring baits
‘TIME TO SPOOL UP HIGH-PERCENTAGE SPRING BAITS don't the boat or walk the shore without plete crankbaite, ep ‘swimming grub se alts, this time of vear, ate very effective and easy to use for bass walleye and ys Merk Fisher, Rapala's Director of Field Promotions. Use them to target points, coves shar
Slide 48: Rapala YouTube
— ~_ = 215 Dooooooown, boy. = papas ccaial Rapala YouTube ah ae eee 7"
Slide 49: Partners & Promotions
PARTNERS & PROMOTIONS
Slide 50: Home: Outdoor Recreation
Home: Outdoor Recreation Shoes & Boots Fishing Hunting __ shooting Free Shipping on orders $50+ No code needed. meme RaPala NEW Scatter Rap: = y <—N with evasive action Boating —J + Drala Fang Meow. + 8353900) wah Scter pan ire Tein Cartten
Slide 51: Great products, great deals at Cabela's
GREAT PRODUCTS, GREAT DEALS AT C2-Gelis i stay there. This concept has made the Jers around the world, 16008485 Pro : = rm ip All Tools & Accessories r Forstore hours and locations visit wrw.eabelas.com/stores* Discounts shown are effective June 6-22, 2014
Slide 52: Attack Saltwater Segment
ATTACK SALTWATER SEGMENT
Slide 53: om nN : a
om nN : a The can Gets more logksin sees betore soy sauce. ori ongs. Rapala Rapala Rapala
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Slide 55: Innovative New Hero Product
INNOVATIVE NEW HERO PRODUCT
Slide 56: National Campaigns - Ripstop
NATIONAL CAMPAIGNS - RIPSTOP
Slide 57: Scatter Rap: with evasive action
V Scatter Rap: Withevasiveaction. & ‘Theemate Souter Roy Brunke hese ch ‘We eae th Rapa Dd shops hen sour new Sten yy tocreste he most evasiv erative sweepingacton eversen, Sap || SE ‘Scatter Rap-CountDown’ ‘Scatter Rap" Minnow Evasive action is here. Rapala RAPALA searterRap
Slide 58: Shadow Rap
g 9) Shader Rap: Most dangerous omy ever. Shadow ~ Most dangerous moves ever.
Slide 59: Tournament Success
TOURNAMENT SUCCESS
Slide 60: Tournament wins with Rapala, Storm and VMC tackle
DEFOE LANDS LUNKER ON TOP-SECRET RAPALA, STORM AND VMC TACKLE HELP ‘BRANDON PALANIUK WINS TOPWATER BAIT IN BASSMASTER ANGLERS CLAIM THREE OF TOP 5 SPOTS: BASSMASTER ANGLER OF THE YEAR CLASSIC IN BASSMASTER TOURNAMENT a WHEELER WINS BIG! AT CHEROKEE WITH VMC JIGS, STORM 360GT SEARCHBAITS™ & RAPALA LU
Slide 61: Wheeler wins
‘WHEELER WINS : *, BASSiest RaPala| oa | sufi MIKE TACONELU DeFoe Likely To Fish ‘Tharp Is Cautiously Foliage Optimistic
Slide 62: Protecting & Growing Market Share
PROTECTING & GROWING MARKET SHARE
Slide 63: Southwick Independent Market Study
Southwick Independent Market Study Tackle Buying Habits — Freshwater Anglers Most Frequently Purchased Brands and Average Amount S| Largemouth/ spotted bass Smallmouth anglers Panfish anglers Trout anglers bass anglers Catfish anglers Rapala Rapala Rapala Rapala Rapala Hard Baits Strike King Strike
Slide 64: Market Driven Growth Utilizing Innovation Power
MARKET DRIVEN GROWTH UTILIZING INNOVATION POWER LARS OLLBERG CHIEF OPERATING OFFICER
Slide 65: Alluring facts about recreational fishing
Alluring facts about recreational fishing Fishermen spend in the 200 million sport United States in total fishermen in the world 50 billion USD per year on their hobby* 40 *Total retail spending including e.g. travel, lodging, boats, cars etc.
Slide 66: Fishermen spending breakdown
Fishing related Fishing related lodging travelling 19% 30% Fishing guides & other 4% Fishing equipment and baits 17% Fishing related boating expenses 19% Fishing licenses & permits 11%
Slide 67: Rapala is present in all sales channels
Rapala is present in all sales channels 42
Slide 68: Market driven growth
Market driven growth Detailed “Follow the segmentation Opportunity money” – go after Market study and analysis of management the most lucrative the market markets and niches 43
Slide 69: Introducing new concepts: Rapala Coastal
Introducing new concepts: Rapala Coastal 44
Slide 70: Introducing new concepts: Rapala Urban
Introducing new concepts: Rapala Urban 45
Slide 71: Introducing new concepts: Carp Spirit & Dynamite
Introducing new concepts: Carp Spirit & Dynamite
Slide 72: Innovation investment returns are not always obvious
Innovation investment returns are not always obvious Investment… …rate of return Average return on innovation Profit Product Product Customer Profit Product Product Customer model Network Structure Process performance system Service Channel Brand engagement model Network Structure Process performanc
Slide 73: Balanced Innovation Portfolio
Balanced Innovation Portfolio Unspoken Creating trends Z% Rapala experience Y% Needs Profit model New products Following trends X% Spoken Today Customers Future 65
Slide 74: Innovation hubs and innovation camps
Innovations play a key role in our growth strategy Innovation hubs Innovation camps around the world 49
Slide 75: Inside-out perspective
Inside-out perspective ? Innovator Customer ! 106
Slide 76: Outside-in perspective
Outside-in perspective Customer Innovator Innovator 109
Slide 77: E-commerce and Digital Marketing Fueling Growth
E-COMMERCE AND DIGITAL MARKETING FUELING GROWTH BONNIE HOCKIN CHRIS BELDON VICE PRESIDENT, DIRECTOR, E-COMMERCE DIGITAL MARKETING
Slide 78: Rapala.com
RaPalA.com O Ned CJ uy VA u
Slide 79: Premium Brand Positioning
Premium Brand Positioning On a world class platform ® platform .com
Slide 80: eCommerce Platform for Growth
#1 eCommerce Platform for Growth ®
Slide 81: 12,000+ SKUs
Key US Advantages .com 12 Brands 12,000+ SKUs 1 Cart 12,000+ SKUs
Slide 82: Responsive Design
‘ Fast ripping. ~ a oe Hard stopping. I Responsive Design
Slide 83: Digital Presence
CATCH EARLY-SEASON BASS ON BRIGHT, CRAYFISH-PATTERNED RAPALA® CRASH COVER WITH RAPALA BX BRATS ‘THIS SPRING FOR BIG BASS Digital ol wees CRASH COVER WITH RAPALA’ BX’ BRATS EARLY SEASON BASS THIS SPRING FOR BIG BASS ON BRIGHT, CRAYFISH-PATTERNED RAPALA’ DT“4'S id! FOR LIGHTWEIGHTS Drop in fast to kee
Slide 84: State of the Art Warehouse Operations in the US
State of the Art Warehouse Operations in the US Advanced Warehousing Practices • Multi-order pick-pack-ship process • Well-trained team of operational experts • Exceptional fill rate • Near zero error performance
Slide 85: All Season Support
Dedicated Customer Service Reliable Same day response to most consumer calls and emails to make sure customers can get the answers they need. Adaptable Our agents are trained to answer questions across our brand and product lines, individual order issues, and any technical difficulties a consumer ma
Slide 86: Digital Eco-system
Digital Eco-system Digital Social Email Social Blog Social Warehouse/ Customer Operations Service
Slide 87: Newly Launched In EU!
Rapala.com EU eCommerce Enabled Newly Launched In EU!
Slide 88: Rapala.com EU: 4,000+ SKUs
Rapala.com EU Our Key Advantages Building to 5 Brands .com/eu 1 Cart 4,000+ SKUs 4,000+ SKUs 2 Currencies ENG Multi-Language Adaptable
Slide 89: Digital Eco-system
Digital Eco-system Digital Social Email Social Blog Social Warehouse/ Customer Operations Service
Slide 90: Rapala Social
ENGAGING & INSPIRING OUR DIGITAL COMMUNITY RAPALA SOCIAL Leading the way in community & social marketing More
Slide 91: The 2018 Digital World
The 2018 Digital World KEY STATISTICAL INDICATORS FOR THE WORLD’S INTERNET, MOBILE AND SOCIAL MEDIA USERS AS OF JANUARY, 2018. 7.953 B 4.021 B 3.196 B 5.135 B 2.958 B TOTAL POPULATION INTERNET USERS ACTIVE SOCIAL MEDIA USERS UNIQUE MOBILE USERS ACTIVE SOCIAL MOBILE USERS 55% 53% 42% 68% 39% URBANISA
Slide 92: Rapala Social Footprint
Rapala Social Footprint Facebook Media Partners Approx. 500,000 fans combined. Partnering with the world’s best content 25 regional pages, targeted marketing. producers & distributors. Instagram Influencers Approx. 400,000 followers globally, Extensive network of Pro Staff & 20 regional pages, targe
Slide 93: Localization
Localization Coordinated digital launch & localized messaging Rapala understands the importance of localization; from local species to local techniques, language, lingo and habits. We execute digital and social activities from a local level, with strong head office brand and content support. High qu
Slide 94: Active Community Influencers
Active Community Influencers www.rapala.com 69
Slide 95: Predator Digital Launch
Predator Digital Launch Summary of Rapala’s combined social efforts and results during launch of the Super Shadow Rap, X-Rap Peto and X-Rap Scoop from February – April, 2018.
Slide 96: Rapala Predator
Rapala Predator Predator Accessories - SHOP NOW Super Shadow Rap X-Rap Peto X-Rap Scoop SHOP NOW SHOP NOW. SHOP NOW. www.rapala.com 71
Slide 97: 3,500,000+ Reach
+ 3,500,000 Reach X-Rap Peto, Super Shadow Rap and X-Rap Scoop videos combined have in three months reached more than 3.5 million people who are interested in predator fishing through social networks in target markets with localized messaging.
Slide 98: Predator Series
FACEBOOK | INSTAGRAM | YOUTUBE Predator Series SUPER SHADOW RAP | X-RAP PETO | X-RAP SCOOP > 2,500,000 Total number of times the videos were shown ~ 2,000,000 Number of unique viewers > 26,000 (6,000 from IG) Engagement – comments, likes & shares Campaign targeted to Sweden, Finland, Denmark, Poland
Slide 99: Summary
SUMMARY JUSSI RISTIMÄKI PRESIDENT AND CHIEF EXECUTIVE OFFICER
Slide 100: Key priorities for the next two years
Key priorities for the next two years 1 Executing growth agenda 2 Digitalization 3 Turnaround of Batam plant 4 Supply chain management 5 Boosting “One Rapala” to focus on end-to-end profitability 75
Slide 101: Investment highlights
Investment highlights 1. 1 Non-cyclical consumer product business with global presence and distribution 2. 2 Broad brand portfolio with the most appreciated brands of the sector on board 3. 3 Geographical diversification mitigates weather effects and Rapala lures have caught more world record fish o